Getting a Mortgage to Buy a Property Off-Plan

Buying a property off‑plan, meaning purchasing a new build before it’s built, can offer some useful benefits. However, getting a mortgage can come with unique challenges. Here, we’ll explain how off-plan mortgages work, what the lending criteria involves, which lenders are available, and where to find expert guidance.

Can you get a mortgage to buy a property off-plan?

Yes, it’s possible to get a mortgage for a new build if you’re buying a property off‑plan, but not all lenders offer them, and the criteria can be stricter compared to homes that have already been built. Certain lenders view mortgages for off-plan properties as a higher risk due to a few areas that differentiate this type of property.

The main concerns for lenders will relate to potential construction delays, housing market shifts, valuation uncertainty, and in the most extreme cases - property developer insolvency. Many lenders still offer off-plan mortgages, but often, the best strategy is to approach them through a broker.

How buying a property with an off-plan mortgage works

The exact process will depend on the developer that’s building your property and the lender you’re using for the mortgage, but here’s a brief overview of the purchasing process:

1. Speak to a broker: Speaking to a broker who specialises in off-plan property purchases means they can ensure you have all the correct documents and paperwork required.

2. Arrange a MIP: Your broker can quickly arrange a mortgage in principle (MIP). This gives you an idea of your budget and lets the seller or developers feel comfortable that you’re serious and in a position to borrow (you don’t have to proceed with the lender that issued the MIP).

3. Search and negotiate: Find the off-plan home you want to buy and negotiate the price. Your broker can provide some tips on how to approach negotiations.

4. Reserve the property: This is done with a reservation deposit (separate to your mortgage deposit), often in the region of £500 to £2,000. Before you hand over any money, make sure you’ve seen the plans, plot placement, and specifications.

5. Apply for an off-plan mortgage: Your broker can then help you apply for a mortgage with the most appropriate lender based on your personal circumstances and the specific off-plan property you want to buy.

6. Exchange contracts: Once your broker has helped arrange the best new-build mortgage offer for your needs and you’ve completed all the necessary paperwork, it’s time to exchange contracts.

7. Final checks: When the construction is completed for your home, there’ll be final inspections. You can arrange a professional pre-snagging inspection to help spot and rectify any issues before completion. Your lender will also want to carry out a final valuation.

8. Completion and moving in: There won’t be a completion date when you exchange, it will be “completion on notice”, which usually means you get 10 working days to complete once the property is finished. Then the property is all yours to move into.

Lending criteria for buying off-plan

Here’s an overview of the typical lending criteria for off-plan mortgages and the key factors to be aware of when purchasing this type of new-build property:

• Your deposit: As a residential buyer, most lenders accept deposits starting from 10%, meaning a 90% loan-to-value (LTV) ratio. Certain lenders will allow a 5% deposit (95% LTV). If you’re an investor or purchasing off-plan for a buy-to-let, deposit requirements are likely to be higher.

• Valuation: Your mortgage offer will be based on the lender’s valuation at the time of completion, which may differ from the original purchase price. If the property value falls or the lender disagrees with the developer’s pricing, you may need to make up the difference.

• Time limits: Mortgage offers are usually valid for 3 to 6 months. If construction delays push the completion date past this window, you may need to reapply for a new mortgage, which can affect your interest rate or how much you can borrow, depending on the market conditions.

• Property type: Some lenders are cautious about specific property types such as high-rise flats, leasehold new builds with complex terms, or studio apartments below a certain size. Unusual or non-standard construction properties usually require approaching a specialist lender.

• Affordability: Lenders will assess your income, existing debts, and current outgoings to check your mortgage affordability. If it’s an off-plan buy-to-let, the expected rental income plays a significant role.

• Credit history: A clean credit history can open up more off-plan mortgage options. However, if you have bad credit, there are still specialist bad credit lenders who will consider your application, but they can be harder to find without a broker.

• Developer reputation: Lenders tend to be more comfortable financing properties from well-known or established developers with industry-recognised guarantees or warranties. If you’re buying from a lesser-known developer, your options may be more limited.

How a mortgage broker can help you buy off-plan

If you’re applying for a mortgage to buy off-plan, finding the right lender and navigating the process can be time-consuming and complex. Working with a broker who understands off-plan mortgages can be a major advantage and help you:

• Identify lenders who are comfortable with off-plan mortgages.

• Get a mortgage offer with a long enough validity period for your construction.

• Understand and meet lender criteria relating to deposits and property types.

• Advise you on pre-snagging inspections.

• Arrange a valuation at the correct time (usually before completion).

• Ensure your finances are in order and presented in the best way.

• Avoid delays by guiding you through the whole purchase process.

• Navigate any issues that arise if the value changes before completion.

Our advisers will take the time to understand your circumstances and property ownership goals. If you’d like a free, no-obligation chat with a broker who specialises in off-plan mortgages, you can get started here:

Begin your mortgage journey

Get Started

Advantages and disadvantages

Here’s an overview of the main advantages and disadvantages to consider when buying a property off-plan with a mortgage:

Advantages

• Potential to secure a property at a lower price by reserving in advance.

• Ability to customise aspects to your taste, like the layout and finishes.

• New builds often come with warranties and energy-efficient designs.

• Decoration will all be new and hopefully long-lasting.

• Some developers offer incentives or discounts towards the purchase.

• Waiting longer to move in can allow you to continue saving.

• The deposits to reserve an off-plan property can be relatively small.

Disadvantages

• Construction delays can mean reapplying for your mortgage offer.

• There can be risks with developers that put your reservation deposit at risk.

• There’s often a smaller pool of lenders offering off-plan mortgages.

• Some lenders have restrictions relating to the construction and property type.

• You may have to adjust your finances for valuation changes.

• Expert support from a broker is usually required to ensure a smooth process.

Off-plan mortgage lenders in the UK

Not all mortgage lenders are willing to lend on off-plan purchases, and those that do may have specific requirements around valuation, deposit size, or the completion timeline. If you want to get an idea of some mainstream lenders who may be open to offering a mortgage, here are a few popular high street lenders:

• Halifax: May consider off-plan mortgages if the construction has a guarantee or warranty from an acceptable provider. Builder cash incentives are allowed, but only up to 5% of the purchase price/valuation (whichever is lower). Halifax allows up to a 95% LTV on new-build houses and 85% on new-build flats.

• Barclays: Will consider off-plan new builds, but with a maximum LTV of 90% for houses and 85% for flats. Mortgage offers from Barclays are only valid for 6 months, but can sometimes be extended by a further 6 months without restarting the whole process.

• Nationwide: Can offer mortgages for off-plan purchases, and up to a 95% LTV with some properties (85% for flats). However, gifted incentives from builders aren’t accepted if your LTV is above 90%. Also, mortgage offers from Nationwide are valid for 9 months, but with no option to extend.

If you want to compare your options and check which lenders are currently offering the most competitive rates, it’s best to speak with a specialist broker. They can help you avoid lenders that don’t support off-plan purchases and guide you toward those with more flexible mortgages.

Why choose Teito for your off-plan mortgage?

With our free comparison tool, you can explore the latest mortgage rates for new-build properties to get an idea about potential off-plan interest rates. However, if you want a more accurate comparison or would prefer tailored guidance from an advisor, our specialist brokers understand the complexities of these homes.

Here are some more reasons why homebuyers and investors across the UK trust us to help them get an off‑plan mortgage:

• Easily compare current mortgage rates online for free

• Our brokers are 5-star rated on leading review sites

• Free initial chat with a specialist broker and no obligation to proceed

• Access to lenders experienced in off‑plan and new‑build mortgages

If you’d like to compare off-plan mortgage rates or speak with a broker who specialises in new build developments, you can get started here.